For months, Paramount’s controlling shareholder and Skydance sought to seal a merger that would transform the media industry, before those talks ground to a sudden halt in June. Now, just weeks later, the two sides have reached a preliminary deal to merge, four people familiar with the negotiations said.
The agreement will still have to be approved by a special committee of Paramount’s board of directors, said the people, who spoke on the condition of anonymity as the talks resumed.
If they win that approval, the deal will combine Paramount — the parent company of CBS, MTV and Nickelodeon — and Skydance, the up-and-coming movie studio that helped produce “Top Gun: Maverick,” into a new giant in Hollywood.
An agreement would be a changing of the guard in the media world, as legacy companies like Paramount struggle with the decline of cable TV and with streaming services that bleed cash. Shari Redstone, who controls Paramount through her stake in its parent company, National Amusements, is part of the family that has run the media conglomerate for decades. The new company would be backed instead by big-ticket investors like the private-equity firm RedBird and David Ellison, son of the Oracle founder Larry Ellison.
It would also end a dramatic saga that has played out over months. Paramount and Skydance entered into exclusive negotiations in April only to let them lapse in May without striking an agreement. Their talks continued, even as other suitors emerged.
The two finally seemed to be headed toward a deal in June after a marathon weekend of negotiating. But just as Paramount’s special committee was set to vote on that deal, lawyers for National Amusements emailed Paramount’s special committee to end the discussions.
In the weeks that followed, Paramount outlined what a stand-alone future might look like for the company as it navigated a challenging media landscape. It appointed three executives to succeed Bob Bakish, who stepped down as chief executive in April, through a joint “office of the C.E.O.” role. They said in a recent shareholder meeting that they planned to explore a streaming joint venture and cut $500 million in costs as the media giant grappled with about $14 billion in debt.
The company’s shares have fallen more than 16 percent over the past month, as Paramount’s investors have remained concerned about its prospects.
Paramount has been exploring a deal despite strong headwinds to traditional media. Critics have argued that the company was too late to streaming, leaving it undersized and lagging behind its rivals. They also point to missed opportunities, such as when Mr. Bakish balked at selling trophy assets like Showtime and BET to suitors offering billions in recent months.
Skydance and National Amusements resumed their negotiations not long after a cooling-off period, three of the people said. This latest deal would give Ms. Redstone better financial terms than the previous iteration. National Amusements’ equity would be valued at $1.75 billion, up slightly from $1.7 billion in the last incarnation, three of the people said.
The deal would also give National Amusements a greater degree of protection against potential shareholder lawsuits over the deal. That had been a sticking point in earlier negotiations, given significant shareholder angst about the transaction.
The deal is expected to offer Paramount a 45-day “go shop” period in which it can talk to other suitors about a potential deal, three of the sources said. The billionaire Barry Diller and his digital media conglomerate, IAC, have expressed interest in National Amusements, as has Edgar Bronfman Jr., the media and finance executive, and Steven Paul, the Hollywood executive best known for his work on the “Baby Geniuses” franchise.
The Paramount board committee will now evaluate whether those new terms will be sufficiently palatable for shareholders.
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